Rule #1 Investing Screen

Performance

Rule #1 Investing

S&P 500

YTD Return:

-17.6%

4.0%

Five Year Return:

0.6%

11.1%

Ten Year Return:

4.2%

4.4%

Inception:

7.9%

4.3%

Data as of 10/31/2016

The Rule #1 Investing Screen represents AAII's interpretation of the investment approach and is not determined by the original strategist. The list of passing companies represents a hypothetical portfolio, which is used to track the screen’s performance on a chart.

Passing Companies

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Chart

While there have been numerous successful value investors throughout the years, Warren Buffet is probably the most famous. According to Mr. Buffett, there are only two rules to investing: Rule #1: Don't lose money, and Rule #2: Don't forget rule #1. In the book, "Rule #1" (2006, Crown Publishers), author Phil Town lays out an investment strategy that attempts to follow Mr. Buffett's rules.

The Philosophy

A former green beret turned river guide, Phil Town was introduced to Rule #1 investing by a client who was almost killed during one of his guided river trips. Following the Rule #1 approach to investing, Town says he turned $1,000 into $1 million within five years.

The key, according to Town, is to purchase "wonderful companies" at attractive prices. Armed with the principles of Rule #1 investing and the array of quality free financial data and tools on the Internet, Town believes individual investors can easily outperform the market with just 15 minutes a week. Table 1 summarizes Town's Rule #1 investing approach.

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